For example, it can calculate interest rates in situations where car dealers only provide monthly payment information and total price without including the actual rate on the car loan. To calculate the interest on investments instead, use the Inter... Read more
The quick ratio only includes highly-liquid assets or cash equivalents as current assets. Both types of liquidity ratios are calculated under a hypothetical scenario in which a company must pay off all existing current liabilities that have come due... Read more
For the PV formula in Excel, if the interest rate and payment amount are based on different periods, adjustments must be made. A popular change that’s needed to make the PV formula in Excel work is changing the annual interest rate to a period... Read more
For example, you could use this formula to calculate the present value of your future rent payments as specified in your lease. Below, we can see what the next five months would cost you, in terms of present value, assuming you kept your money in an... Read more
They can also be taxed at much higher rates than other dividends - sometimes as much as thirty-five percent. With that, different kinds of preferred dividends exist, with different tax consequences. True preferreds pay real dividends while trust pre... Read more
When you borrow, you’re essentially using someone else’s funds, and interest is the cost you pay for doing it. The amount of interest expense has a direct bearing on profitability, especially for companies with a huge debt load. Heavily... Read more
However, there is a standard formula used for calculating the loan payoff amount of a mortgage based on the principal, the interest rate, the number of payments made, and the number of payments remaining. This article provides detailed information t... Read more
For example, the payback period on a home improvement project can be decades while the payback period on a construction project may be five years or less. Unlike other methods of capital budgeting, the payback period ignores the time value of money... Read more
Owner's equity is simply the on-paper value of a company's assets minus its liabilities. Owner's equity refers to the portion of a business that is the property of the business' shareholders or owners. The simple explanation of owner's equity is tha... Read more
As you use the formula, you will come to the realization that opportunity cost is a plain, common-sense concept that is explored in-depth by investors and economists. There are plenty of dollar signs throughout the pathway, but you will definitely h... Read more
